Transcript Philosophical Determinants of Islamic Economics

Bayu Taufiq Possumah, Ph.D
Institut Islam Hadhari
Research Center for Islamic Economics and Finance
Universiti Kebangsaan Malaysia
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Idea that religion can be a major influence in determining human economic
activities would be dismissed as incoherent, irrational and emotional by the
majority of contemporary economists [See Robbin (1935), Crespo, (1997)].
This is primarily due to the historical experience of Western Europe with
Christianity and the result of the secularization process that took place in
Western Europe since the 17th century. As presented by some writers, this
secularization process is very much a western European experience and may
not be universally applicable
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Two causal directions in the literature on the sociology of religion. First:
Religion is dependent upon developments in the economic and political aspects
of contemporary life. Events in an economy - levels and standard of living or
governmental market interference - influence such things as attendance at
religious services or religious beliefs. The second: theoretical approach looks
at the connection between religion and economic and social life from the other
direction. Religion is thought of as being the independent variable, influencing
something about outcome on the economic, political, and social side
The current view on the religion of economics is related to many reasons:
enhance modern economic science by generating new information on “nonmarket” behavior (Iannaccone 1998)
Mc Cleary and Barro (2006) look at the consequences of having an established
state religion. They find that it is actually positive, both for church attendance
and for religious beliefs
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The secularization hypothesis
The religion market model
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Economic development causes individuals to
become less religious, as measured by church
attendance and certain religious beliefs
economic development causes organized
religion to play a lesser role in political
decision-making and in social and legal
processes more generally
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Islamic Worldview - Basis of Economic Matter
Al Attas (1984) interpreted worldview as “a metaphysical survey of visible as well as the
invisible worlds including the perspective of life as a whole; [thus, it] is not a worldview that is
formed merely by the gathering together of various cultural objects, values and phenomena into
artificial coherence”
Chapra (1998) stresses on the importance of a true worldview. The worldview explains the
origin of the universe and the nature of human life. Therefore, (our conclusion) Differences in
worldview lead to difference in conclusions about the meaning and purpose of human life, the
ultimate ownership and objective of the limited resources at the disposal of human beings, the
relationship of human beings towards each other (their rights and responsibilities) and their
environment, and the criteria for well-being”.
Islamic Worldview of
Economic
Kaffah Paradigm of
Economic System
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Tawhidi Epistemology of Economics
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Derived from the Greek words episteme (knowledge) and logos
(reason), epistemology focuses on the knowledge-gathering process
and is concerned with developing new models or theories that are
better than competing models and theories.
Epistemology is the study of the formation and circulation of
knowledge. Linked to the economic in Islam, the central or core
concept which permeates all aspects of Islamic economic
epistemology is Tawhid or the unity of God
Tawhidi Paradigm of economic sees human reason aided or rather
guided, by revelation. As stated by the well-known Islamic scholar, alGhazzaly (died 1111 A.D.), "prudence alone does not guarantee restraint
and moderation and requires the aid of revelation."(Fadl, 1991) This
proposition is at present considered as "unscientific" in the western
secular approaches to science (Haneef, 1997)
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Belief in the Day of Resurrection and the hereafter life, this principle directs a human to
give priority to the hereafter than world consumption. Hereafter consumption is the future
consumption (because there is reward in heaven), while world consumption is the present
consumption
The concept of success in Muslim life is measured by religious morals of Islam, and not by
the amount of property owned. Higher morality is the higher the success achieved. Virtue,
truth and devotion to Allah are the key to Islamic morality. Virtue and truth can be achieved
with good behavior and useful for life and keep away from crime.
Property is the Allah’s grace and not something which in itself is bad (excessive and should
be shunned. The property used to achieve the goal of life is the Allah’s pleasure, if cultivated
and in correctly used
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The epistemological paradigm of Islamic economic or how we know the
economic in Islam, based upon the idea of Unity (al-Tawhid) sourced
from Qur’an, possess a unified and coherent vision of what the
multiplicity of methodologies means. Qur’an is a belief system (or
theory) that guides the way we do the economics or more formally
establishes a set of economic practices.
This methodology is ideological or normative approach, issue forth
ultimately from the Quranic view of Reality and of human’s place in
that Reality. From this methodology, we can summarize the following
results: normative approach can be seen from the presence of the
economic in al-Quran and the Fiqh of economics.
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The Islamic economics arguably as an independent discipline of
economic science which is different from other mainstream economic
system, that is because Islamic economic has its own character which
is an integral part and even as a consequences of the religion itself.
Worldview and epistemology of Islamic economic emanated from the
principle of Islamic view to system of life. Shariah law (Fiqh) and
ethical values formulated as the framework of Islamic economic
analysis to various problems and behaviour of human life